CBN To Sell $20,000 To Each BDC Operator At ₦1,450/$1

The Central Bank of Nigeria (CBN) has given the green light for the exchange of foreign currency (FX) to qualified Bureau de Change (BDC) agents at a rate of ₦1,450 naira to the dollar.

The central bank announced on Thursday that a total of $20,000 will be distributed among each BDC, with the transaction taking place at a rate of ₦1,450/$ (signifying the lower limit of the exchange rate on the previous trading day at NAFEM).

In a press release on Thursday, the Acting Director in Charge of Trade and Exchange Departments at the CBN, Aliyu Mahdi, mentioned that the apex bank has noticed ongoing irregularities in the retail segment of the market, which is contributing to the growth of the parallel market and increasing the gap between the official and parallel exchange rates.

Mahdi said: “Following the ongoing reforms in the foreign exchange market, to achieve an appropriate market-determined exchange rate for the Naira, the Central Bank of Nigeria (CBN) has observed the continued distortions in the retail end of the market, which is feeding into the Parallel market and further widen the exchange rate premium.

“To this end, the CBN has approved the sales of FX to eligible Bureau De Change (BDCs) to meet the demand for invisible transactions.”

The central bank has authorized all BDC managers to market their products to qualified buyers, ensuring they can charge a maximum of 1.5 per cent more than the cost price set by the CBN.

The monetary authority has directed all qualified BDCs to transfer funds in naira to the CBN’s naira deposit account details and provide proof of payment along with the required documents for distribution at its branches in Abuja, Akwa, Kano, and Lagos.

CBN Selling To BDCs

Naija News reports that the CBN has made its fifth effort to sell foreign exchange (FX) to BDCs following a lengthy hiatus by the apex bank in 2021.

The CBN lifted its suspension in the early part of the year after it revoked the operating licenses of more than 4,173 BDC entities in February.

The initial sale took place in February 2023, with the central bank distributing $20,000 worth of FX to each BDCS at a rate of ₦1,301 per dollar.

Following this, the bank halved the distribution amount and sold FX at a rate of ₦1,251 per dollar.

In April 2024, there were two transactions involving FX with BDCs: the central bank initially offered $10,000 to each BDC at a rate of ₦1,101 per dollar, and then another $10,000 at a rate of N1,021 per dollar.

The current exchange rate set by the CBN for selling FX to BDCs is the highest it has reached, underscoring the depreciation of the local currency this year.

This recent action by the CBN is particularly significant given the current challenges the naira is facing in the foreign exchange market.

With over 1,583 approved BDC entities, these sales could potentially inject about $21.58 million into the retail segment of the market.

By increasing the supply of FX to the retail sector, the CBN seeks to narrow the gap between the official and unofficial market rates, which have surpassed the N1,600 mark.